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<p><b>Introduction</b><b> 1</b></p> <p>How This Book is Different 1</p> <p>Foolish Assumptions 2</p> <p>Icons Used in This Book 3</p> <p>Beyond the Book 3</p> <p>Where to Go from Here 3</p> <p><b>Part 1: Getting Started with Mortgages </b><b>5</b></p> <p><b>Chapter 1: Determining Your Borrowing Power</b><b> 7</b></p> <p>Only You Can Determine the Mortgage Debt You Can Afford 8</p> <p>Acknowledge your need to save 8</p> <p>Collect your spending data 9</p> <p>Determine Your Potential Homeownership Expenses 10</p> <p>Making your mortgage payments 10</p> <p>Paying property taxes 12</p> <p>Tracking your tax write-offs 13</p> <p>Investing in insurance 14</p> <p>Budgeting for closing costs 14</p> <p>Managing maintenance costs 17</p> <p>Financing home improvements and such 17</p> <p>Consider the Impact of a New House on Your Financial Future 17</p> <p>Acting upon your spending analysis 21</p> <p>Establishing financial goals 22</p> <p>Making down-payment decisions 23</p> <p><b>Chapter 2: Qualifying for a Mortgage</b><b> 25</b></p> <p>Getting Preapproved for a Loan 25</p> <p>The worst-case scenario 26</p> <p>Loan prequalification usually isn’t good enough 26</p> <p>Loan preapproval is the way to go 27</p> <p>Evaluating Your Creditworthiness: The Underwriting Process 28</p> <p>Traditional underwriting guidelines 29</p> <p>New underwriting technology 32</p> <p>Eyeing Predicament-Solving Strategies 34</p> <p>Insufficient cash for a down payment 34</p> <p>Excessive indebtedness 38</p> <p>Insufficient income 39</p> <p>Credit blemishes 40</p> <p>Low appraisals 41</p> <p>Problem properties 45</p> <p><b>Chapter 3: Scoping Out Your Credit Score</b><b> 47</b></p> <p>Defining Credit Scores 48</p> <p>Assessing Your Credit History 48</p> <p>What goes into your credit report 49</p> <p>Check your credit report 50</p> <p>Understanding How Scores Work 51</p> <p>FICO scores can differ between bureaus 51</p> <p>What a FICO score considers 52</p> <p>What FICO scores ignore 60</p> <p>Interpreting scores 61</p> <p>Getting your score 61</p> <p>Managing your score 62</p> <p><b>Part 2: Locating a Loan </b><b>63</b></p> <p><b>Chapter 4: Fathoming the Fundamentals</b><b> 65</b></p> <p>Grasping Loan Basics: Principal, Interest, Term, and Amortization 66</p> <p>Deciphering Mortgage Lingo 67</p> <p>So what’s a mortgage? 67</p> <p>How to scrutinize security instruments 68</p> <p>Eyeing Classic Mortgage Jargon Duets 70</p> <p>Fixed or adjustable loans 70</p> <p>Government or conventional loans 71</p> <p>Primary or secondary mortgage market 72</p> <p>Conforming or jumbo loans 74</p> <p>Long-term or short-term mortgages 75</p> <p>Introducing the Punitive Ps 76</p> <p>Prepayment penalties 76</p> <p>Private mortgage insurance (PMI) 78</p> <p><b>Chapter 5: Selecting the Best Home Purchase Loan</b><b> 81</b></p> <p>Three Questions to Help You Pick the Right Mortgage 82</p> <p>How long do you plan to keep your mortgage? 82</p> <p>How much financial risk can you accept? 83</p> <p>How much money do you need? 84</p> <p>Fixed-Rate Mortgages: No Surprises 85</p> <p>Adjustable-Rate Mortgages (ARMs) 87</p> <p>How an ARM’s interest rate is determined 88</p> <p>How often does the interest rate adjust? 92</p> <p>What are the limits on rate adjustments? 92</p> <p>Does the loan have negative amortization? 93</p> <p>Fine-Tuning Your Thought Process 96</p> <p>Finding funds 96</p> <p>Making the 30-year versus 15-year mortgage decision 97</p> <p>Getting a Loan When Rates Are High 98</p> <p><b>Chapter 6: Surveying Special Situation Loans</b><b> 99</b></p> <p>Understanding Home Equity Loans 100</p> <p>Using home equity loans 100</p> <p>Operating instructions 101</p> <p>Considering tax consequences 103</p> <p>Eyeing 100 Percent Home Equity Loans 104</p> <p>Taking a Closer Look at Co-Op Loans 107</p> <p>Identifying the legal structure of co-op loans 107</p> <p>Dealing with deal-killing directors 108</p> <p>Tracking down a loan 109</p> <p>Grasping Balloon Loans 110</p> <p>80-10-10 financing 110</p> <p>Bridge loans 114</p> <p>Construction loans 115</p> <p>Renovation/remodel loans 116</p> <p><b>Part 3: Landing a Lender</b><b> 117</b></p> <p><b>Chapter 7: Finding Your Best Lender</b><b> 119</b></p> <p>Going with a Mortgage Broker or Direct Lender? 120</p> <p>Considerations when using brokers 120</p> <p>Developing a list of brokers and lenders 122</p> <p>Interviewing and working with mortgage brokers 124</p> <p>Figuring out how to interview lenders 125</p> <p>Seller Financing: The Trials and Tribulations 127</p> <p>Considering/soliciting seller financing 127</p> <p>Overcoming borrower problems 128</p> <p>Negotiating loan terms 128</p> <p>Deciding whether to provide seller financing 129</p> <p><b>Chapter 8: Searching for Mortgage Information Online</b><b> 131</b></p> <p>Obeying Our Safe Surfing Tips 132</p> <p>Shop to find out about rates and programs 132</p> <p>Quality control is often insufficient 133</p> <p>Beware simplistic affordability calculators 133</p> <p>Don’t reveal confidential information unless 133</p> <p>Be sure to shop offline 134</p> <p>Beware of paid advertising masquerading as directories 135</p> <p>Perusing Our Recommended Mortgage Websites 136</p> <p>Useful government sites 136</p> <p>Mortgage information and shopping sites 138</p> <p><b>Chapter 9: Choosing Your Preferred Mortgage</b><b> 141</b></p> <p>Taking a Look at Loan Fees 142</p> <p>The point and interest rate tradeoff 142</p> <p>Annual percentage rates 144</p> <p>Other lender fees 145</p> <p>Avoiding Dangerous Loan Features 147</p> <p>Prepayment penalties 147</p> <p>Negative amortization 148</p> <p>Comparing Lenders’ Programs 149</p> <p>Fixed-rate mortgages interview worksheet 149</p> <p>Adjustable-rate mortgages interview worksheet 153</p> <p>Applying with One or More Lenders 158</p> <p><b>Chapter 10: Managing Mortgage Paperwork</b><b> 159</b></p> <p>Pounding the Paperwork 159</p> <p>Filling Out the Uniform Residential Loan Application 162</p> <p>1 Borrower information 162</p> <p>2 Financial information — assets and liabilities 166</p> <p>3 Financial information — real estate 167</p> <p>4 Loan and property information 168</p> <p>5 Declarations 170</p> <p>6 Acknowledgments and agreements 170</p> <p>7 Demographic information 172</p> <p>Introducing Other Typical Documents 173</p> <p>Your right to receive a copy of the appraisal 173</p> <p>Equal Credit Opportunity Act 175</p> <p><b>Part 4: Profiting from Smart Mortgage Strategies</b><b> 177</b></p> <p><b>Chapter 11: Refinancing Your Mortgage</b><b> 179</b></p> <p>Refinancing Rationales 180</p> <p>Cost-Cutting Refinances 181</p> <p>Applying the 2 percent rule 182</p> <p>Crunching the numbers 183</p> <p>Restructuring Refinances 186</p> <p>Restructuring when you need to 186</p> <p>Getting a fixed-rate to avoid ARM phobia 188</p> <p>Resetting ARM caps 188</p> <p>Choosing the fast-forward mortgage 190</p> <p>Cash-Out Refinances 190</p> <p>Expediting Your Refi 192</p> <p>Beating Borrower’s Remorse 194</p> <p>Phase I borrower’s remorse 194</p> <p>Phase II borrower’s remorse 195</p> <p><b>Chapter 12: Paying Down Your Mortgage Quicker</b><b> 197</b></p> <p>One Size Doesn’t Fit All 198</p> <p>Interest savings: The benefit of paying off your mortgage quicker 198</p> <p>Quantifying the missed opportunity to invest those extra payments 198</p> <p>Taxes matter but less than you think 199</p> <p>Deciding Whether to Repay Your Mortgage Faster 200</p> <p>Does your mortgage have a prepayment penalty? 201</p> <p>How liquid are your assets? 201</p> <p>Have you funded retirement savings accounts? 201</p> <p>How aggressive an investor are you? 202</p> <p>What are your refinancing options? 203</p> <p>Considering psychological and nonfinancial issues 203</p> <p>Developing Your Payoff Plan 204</p> <p><b>Chapter 13: Reverse Mortgages for Retirement Income</b><b> 205</b></p> <p>Grasping the Reverse Mortgage Basics 205</p> <p>Considering common objections 207</p> <p>Who can get a reverse mortgage? 208</p> <p>How much money can you get and when? 209</p> <p>When do you pay the money back? 210</p> <p>What do you owe? 211</p> <p>How is the loan repaid? 212</p> <p>What’s the out-of-pocket cost of getting a reverse mortgage? 212</p> <p>What are the other reverse mortgage costs? 213</p> <p>What’s the total annual rate? 214</p> <p>How do reverse mortgages affect your government-sponsored benefits? 215</p> <p>Shopping for a Reverse Mortgage 215</p> <p>Making major choices 216</p> <p>Counseling 217</p> <p>Deciding Whether You Want a Reverse Mortgage 217</p> <p><b>Part 5: The Part of Tens</b><b> 219</b></p> <p><b>Chapter 14: Ten-Plus “Must-Knows” About Foreclosure</b><b> 221</b></p> <p>Deal with Reality 222</p> <p>Review Your Spending and Debts 223</p> <p>Beware of Foreclosure Scams 223</p> <p>Consider Tapping Other Assets 223</p> <p>Make Use of Objective Counseling 224</p> <p>Negotiate with Your Lender 224</p> <p>Understand Short Sales 225</p> <p>Seek Legal and Tax Advice 225</p> <p>Understand Bankruptcy 226</p> <p>Consider the Future Impact to Your Credit Report 226</p> <p>Understand the Realities of Investing in Foreclosed Property 228</p> <p><b>Chapter 15: Ten Mortgage No-Nos</b><b> 229</b></p> <p>Don’t Let Lenders Tell You What You Can Afford 229</p> <p>Never Confuse Loan Prequalification with Preapproval 230</p> <p>Avoid Loans with Prepayment Penalties 231</p> <p>Don’t Reflexively Grab a Fixed-Rate Mortgage 231</p> <p>Steer Clear of Toxic 100 Percent Home Equity Loans 232</p> <p>Watch Out for Mortgage Brokers with Hidden Agendas 233</p> <p>Shun Negative Amortization Mortgages 234</p> <p>Don’t Let the 2 Percent Rule Bully You When Refinancing 234</p> <p>Don’t Assume That All Reverse Mortgages Are the Same or Bad 235</p> <p>Avoid Mortgage Life Insurance 235</p> <p><b>Part 6: Appendixes </b><b>237</b></p> <p>Appendix A: Loan Amortization Table 239</p> <p>Appendix B: Remaining Balance Tables 245</p> <p>Appendix C: Glossary 271</p> <p>Index 281</p>

<p><b>Eric Tyson, MBA,</b> is a financial counselor and the bestselling author of <i>Investing For Dummies</i>, <i>Personal Finance For Dummies</i>, and <i>Home Buying Kit For Dummies</i>.</p> <p><b>Robert S. Griswold, MSBA,</b> is a successful real estate investor, hands-on property manager, and the author of <i>Property Management Kit For Dummies</i>.</p>

<ul> <li>Choose, manage, and pay off your mortgage</li> <li>Match your mortgage to your financial goals</li> <li>Qualify for a mortgage even when money is tight</li> </ul> <p><b>Quickly make sense of mortgages</b> <p>Taking out a mortgage to purchase real estate is a huge decision, one that could affect your family's finances for years to come. This easy-to-follow guide explains how to secure the best and lowest-cost mortgage for your unique situation. Whether you select a 15- or 30-year mortgage, you'll get all the tips and tricks you need to pay it off faster—shortening your payment schedule and saving your hard-earned cash. <p><b>Inside…</b> <ul> <li>Fine-tune your finances</li> <li>Qualify for a mortgage</li> <li>Secure the best loan</li> <li>Find your best lender</li> <li>Refinance your mortgage</li> <li>Pay down your loan quicker</li> <li>Must-knows about foreclosure</li> <li>Top mortgage no-nos</li> </ul>

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